With Santiago’s labor costs standing at 20-30% less than those of Santo Domingo for everything from call center agents to software developers, is Santiago the place to get the most value for your outsourcing dollar the Dominican Reinpublic?

The success of the Dominican Republic’s capital Santo Domingo as a call center and BPO hub has naturally drawn some attention to its little bother Santiago. Less than one-third the size, Santiago has about one million inhabitants. Traditionally a textile town, Santiago still suffers from the textile manufacturing shift to Asia. In efforts to turn an obstacle into opportunity, Santiago has launched a myriad of programs to ready their workforce for call center, BPO, and software engineering fields.

What we keep hearing about is the potential of Santiago (not pervasive readiness) from both owners of private companies and public officials. It seems Teleperformance came to the same conclusion as they were poking around Santiago about 9 months back according to David Crow, IT manager at Synergies.

“There are around 2,500 direct call center jobs at the several local companies. None of the big guys are here yet. They would need to wait until Santiago increases the labor market, if one of the big guys were to step in right now it would mess everything up,” said Crow.

A similar sentiment was echoed by Veronica Ogando of the Centro de Exportación e Inversión de la República Dominicana (CEI-RD). “Santiago is currently in development, you can’t go out and hire 1000 people in 3 months, you have to go to Santo Domingo for that kind of volume.”

For small local call center and BPO operations and boutique software development houses Santiago is just fine. However, for those operations to scale or for a larger company to want to locate in Santiago the English speaking and technically skilled workforce must be increased.

Cost Differential

An English speaking call center agent in Santiago earns approximately between $460-640 USD depending on the agents function according to Crow. In speaking with CEI-RD we found a similar range of $425-625 for call center agents, while the average wage rate in Santo Domingo is $750 USD in comparison.

Other operational costs like rent are significantly less in Santiago than Santo Domingo in like kind to staffing rates.

On the other end of the skill spectrum for a senior developer in a technology like .NET or Java a company in the US could pay around $28 USD per hour for that employee to be supplied by a third-party outsourcing service according to Christian Corcino of intellisys, a software development company that specializes in distributed web and mobile applications. That rate although high is for a developer that can write complex proprietary code – not someone gluing code together using frameworks.

“We don’t compete with India on price in very cut and dry terms. Ninety percent of our employees are an extension of a US company’s development team. The value that they (the clients) get out of our developers working as a direct extension of their companies in real-time does compete with India,” said Corcino. He went on to talk about the rigorous testing his developers have to pass to gain employment at Intellisys, “There are developers from the capital that have six years’ experience and cannot pass our test, it would be a tough test for any developer from the US also.”

Facts

Santiago accounts for 16.5% of the contact center market while Santo Domingo has 77.7%

The number of contact center agents in the DR has gone from just under 5,000 in 2006 to approximately 30,000 currently; predictions expect nearly 56,000 agents by 2016

The DR government’s English Immersion Program that trains undergraduates in English proficiency has 52 locations across the country and boasts 31,733 graduates from 2005-2011

Breaking the Bottleneck

Sign up for our Nearshore Americas newsletter:

For small local call center and BPO operations and boutique software development houses Santiago is just fine. However, for those operations to scale or for a larger company to want to locate in Santiago the English speaking and technically skilled workforce must be increased.

“We are at 36 in Santiago and we recently opened an office in Santo Domingo because of the talent gap here in Santiago. There are not enough qualified graduates, really only one university in Santiago (the PUCMM) produces graduates that consistently pass our programming logic tests,” confessed Corcino. “But remember we are only hiring the best of the best,” he cautioned.

For the larger operations that Santiago ultimately wants to attract, those companies able to employ significant amounts of Dominicans displaced from the textile industry exodus and make a real employment impact, several programs are running to break the English speaking technically skilled worker bottleneck.

The English Immersion Program for Competitiveness works in conjunction with Ministry of Education and Community Technology Centers (CTCs) to deploy the 11 month 830 hour M-F course taught in part with interactive software. The Dominico Americano, a language initiative that was setup in many Latin countries several decades ago, has specialized finishing schools that aim to hone the English speaking skills learned through general education and prepare students for jobs with intense English interaction. There is also SMART Santiago, efforts in conjunction with large universities in Santiago, and an initiative with Santiago’s public polytechnic high schools to beef up English language training and make call center work a defined career path.

On the technical side Clustersoft, an organization composed of businesses, universities, and government entities, which wants to make the DR the primary destination for nearshore software development and IT services, is attempting to push development collaboration technologies like SCRUM to make the Dominican Republic as current as possible. The Instituto Tecnológico de las Americas (ITLA) recently setup an office in Santiago, it is self-described as a “technical college” and ISO certified; the focus on high level technical education and English as a second language.

In a very smart way the Dominican Republic understands that there is more to creating a nearshoring destination in Santiago than just repurposing underemployed lawyers, engineers, and business administrators. They are trying to broaden the call center base and bring people in from the lowest rungs on the income ladder. “We have to educate ex-textile workers and show them that if they used to earn $200 as a textile worker now they can earn $500 if they get the necessary skills,” said Ogando.

CATEX has setup a training center in Santiago’s free trade zone. Still dominated by traditional industries like leather goods, textiles, and tobacco, CATEX helping to train people for the BPO and IT services sectors.